Tip Top Farms, Inc. v. Dairylea Cooperative, Inc.

OPINION OF THE COURT

Rubin, J.

The common issue for appellate review in these three appeals is whether Federal antitrust policies bar indirect purchasers from obtaining, in an action to recover damages for a breach of contract or for money had and received, so much of a direct purchaser’s recovery fund in a Federal antitrust action as represents illegal overcharges that had been passed on to the indirect purchasers pursuant to cost-plus pricing provisions in their requirements contracts with the direct purchaser.

Defendant Dairylea Cooperative, Inc. operates a milk pasteurizing plant in Queens County where it pasteurizes and packages milk and milk by-products for itself and other dealers. The plaintiffs are licensed milk dealers, who sell milk at wholesale in various counties in the metropolitan area.

Tip Top Farms, Inc. (Tip Top), the plaintiff in action No. 1, alleges that defendant processed all its requirements for milk and milk products in 1973 and 1974 pursuant to an oral agreement which the parties entered into in October 1973. According to Tip Top, defendant agreed to supply it with all its requirements for packaged milk and milk products in exchange for a price that was based on three components: (1) the monthly price for raw milk established by the Federal Milk Market Administrator; (2) a charge for processing the raw milk, generally negotiated in the spring and fall of each year; and (3) defendant’s cost for fiberboard milk cartons plus 1% as an allowance for plant loss. The parties allegedly agreed that defendant’s profit was to be solely derived from the cost of processing the raw milk. Pursuant to said agreement, defendant issued monthly announcements notifying Tip Top of all increases or decreases in the cost of milk, the cost of processing and the current cost for cartons. Tip Top would order from defendant all its requirements for packaged milk and milk by-products. Tip Top’s requirements varied, and the agreement did not obligate it to purchase a fixed quantity. Furthermore, Tip Top alleges that the agreement was terminable at will by either party.

Plaintiffs in action No. 2, Park Lane Dairies, Inc. (Park Lane) and Park Dale Dairies, Inc. (Park Dale) allege that they entered into a similar oral contract with defendant in 1969, and, pursuant to said agreement, they purchased all their requirements for packaged milk and milk products from defendant in the years 1971 through 1974. Plaintiff in action No. 3, Jerome Dairy Co., Inc. (Jerome Dairy) also alleges that it entered into a similar oral agreement with defendant in December 1967, and that it purchased all its requirements for packaged milk and by-products from defendant during 1971 and 1974 in accordance with said agreement.

In approximately 1976, a Federal antitrust action was commenced against several manufacturers of fiberboard products. In violation of the Clayton Act (15 USC § 15), said manufacturers had allegedly conspired to fix prices and to allocate customers, resulting in illegal overcharges for their products, such as milk cartons, during the years 1960 to 1974. The United States District Court for the Northern District of Illinois certified a class which included direct purchasers from the manufacturer but excluded indirect purchasers further down in the chain of distribution (see, In re Folding Carton Antitrust Litigation, 75 FRD 727). In 1979, the antitrust action was settled. The manufacturers, without admitting any liability, agreed to contribute to a settlement fund exceeding $200,000,000. Since Dairylea was a direct purchaser, it was included as a member of the plaintiff class in the antitrust action, and was notified in 1979 that it could submit a claim indicating its total purchases of fiberboard products from the defendant manufacturer during any four years between 1960 and 1974. Dairylea filed a claim based on its purchases of fiberboard products from defendant manufacturers during the years 1971 through 1974. Dairylea’s claim was approved to the extent of $20,606,000. In April 1980, Dairylea received its proportionate share of the settlement fund in the form of $1,165,981.52 in cash, $29,100 in noninterest bearing promissory notes and a stock warrant entitling it to purchase 291 shares of Federal Paper Board Company, Inc.

Thereafter, plaintiffs commenced the instant actions in an attempt to recover a portion of the funds defendant Dairylea received in settlement of the antitrust action on a theory of breach of contract and on a theory of money had and received. Since Dairylea had passed on the milk carton manufacturer’s overcharge to plaintiffs during the period of 1971 through 1974 by charging them, pursuant to their respective requirements agreements, the cost of the cartons plus 1%, plaintiffs reasoned that a portion of the proceeds of the antitrust settlement received by Dairylea represented a reduction of the cost of milk cartons which they purchased from Dairylea during that period. Therefore, plaintiffs contended that Dairy-lea was contractually obligated under the cost-plus provision of their oral contracts to refund said amount to them.

Special Term granted those branches of defendant’s motions which requested summary judgment dismissing the causes of action in plaintiffs’ respective complaints which sought to recover, on either a breach of contract or money had and received theory, the proceeds defendant received in settlement of the antitrust litigation on the ground that recovery would undermine overriding Federal antitrust policies. We agree with Special Term.

ILLINOIS BRICK RULE AND POLICY CONSIDERATIONS

Clayton Act § 4 (15 USC § 15) provides that any person "who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor * * * and shall recover threefold the damages by him sustained”. In Illinois Brick Co. v Illinois (431 US 720, reh denied 434 US 881), the United States Supreme Court held that, aside from two narrow exceptions, an indirect purchaser had no cause of action against the manufacturer under Clayton Act § 4 to recover treble damages for an illegal overcharge on the theory that the overcharge had been passed on to the indirect purchaser by the direct purchaser in the distribution chain.

In so holding, the Supreme Court echoed the policy considerations it had expressed nine years earlier in Hanover Shoe v United Shoe Mach. (392 US 481), when it ruled that an antitrust defendant could not assert as a defense to a claim for treble damages under Clayton Act § 4, that the plaintiff, a direct purchaser, had "passed on” the overcharge to a buyer further down in the chain of distribution, and, thus, had not sustained real economic injury.

One policy consideration voiced by the Supreme Court in Hanover Shoe (supra, p 493) as warranting a bar to the assertion of "pass-on” defense was the "massive evidence and complicated [economic] theories” that would be injected into the litigation to prove the amount of the overcharge, if any, that was passed on. As noted by the Hanover Shoe court: "A wide range of factors influence a company’s pricing policies. Normally the impact of a single change in the relevant conditions cannot be measured after the fact; indeed a businessman may be unable to state whether, had one fact been different (a single supply less expensive, general economic conditions more buoyant, or the labor market tighter, for example), he would have chosen a different price. Equally difficult to determine, in the real economic world rather than an economist’s hypothetical model, is what effect a change in a company’s price will have on its total sales. Finally, costs per unit for a different volume of total sales are hard to estimate. Even if it could be shown that the buyer raised his price in response to, and in the amount of, the overcharge and that his margin of profit and total sales had not thereafter declined, there would remain the nearly insuperable difficulty of demonstrating that the particular plaintiff could not or would not have raised his prices absent the overcharge or maintained the higher price had the overcharge been discontinued. Since establishing the applicability of the passing-on defense would require a convincing showing of each of these virtually unascertainable figures, the task would normally prove insurmountable” (Hanover Shoe v United Shoe Mach., supra, at pp 492-493). The Illinois Brick court recognized that the same insurmountable evidentiary problems of tracing the effect of an overcharge on prices, sales, costs and profits would apply a fortiori to a case where passing on was used offensively (Illinois Brick Co. v Illinois, supra, at p 741) and "would transform treble-damages actions into massive efforts to apportion the recovery among all potential plaintiffs that could have absorbed part of the overcharge—from direct purchasers to middlemen to ultimate consumers” (Illinois Brick Co. v Illinois, supra, at p 737). The burdens that such attempts would impose on the effective enforcement of the antitrust laws gave rise to the second policy concern voiced by the United States Supreme Court in rejecting the use of pass-on theories to enable indirect purchasers to bring antitrust actions to recover treble damages for illegal overcharges absorbed by them.

Cognizant of the long-standing policy of encouraging vigorous private enforcement of the antitrust law (see, e.g., Perma Mufflers v International Parts Corp., 392 US 134, 139), the Supreme Court was of the opinion that both the defensive and offensive use of the "pass on” concept would "seriously undermine” the effectiveness of such suits (Illinois Brick Co. v Illinois, supra, at p 737): "The concern in Hanover Shoe for the complexity that would be introduced into treble-damages suits if pass-on theories were permitted was closely related to the Court’s concern for the reduction in the effectiveness of those suits if brought by indirect purchasers with a small stake in the outcome than that of direct purchasers suing for the full amount of the overcharge. The apportionment of the recovery throughout the distribution chain would increase the overall costs of recovery by injecting extremely complex issues into the case; at the same time such an apportionment would reduce the benefits to each plaintiff by dividing the potential recovery among a much larger group. Added to the uncertainty of how much of an overcharge could be established at trial would be the uncertainty of how that overcharge would be apportioned among the various plaintiffs. This additional uncertainty would further reduce the incentive to sue. The combination of increasing the costs and diffusing the benefits of bringing a treble-damages action could seriously impair this important weapon of antitrust enforcement” (Illinois Brick Co. v Illinois, supra, at p 745). Consequently, the Hanover Shoe-Illinois Brick rule is predicated in part on the perceived need to concentrate the recovery for illegal overcharges in direct purchasers in order to guarantee that there would be one group with an incentive to sue and enforce the antitrust laws (see, Mid-West Paper Prods. Co. v Continental Group, 596 F2d 573, 577-578, n 9, 580, n 24).

Lastly, in Illinois Brick (supra), the Supreme Court noted that if passing on were allowed offensively, but not defensively, antitrust defendants would face a serious risk of multiple liability. For example, if an indirect purchaser recovered treble damages for the percentage of the overcharge that had been passed on to him, the direct purchaser could still recover treble damages for the full amount of the overcharge because the defendant under the Hanover Shoe doctrine would not be allowed to assert pass-on of the overcharge as a defense. Consequently, unequal application of the pass-on concept would substantially increase the possibility of subjecting a defendant to inconsistent adjudications (Illinois Brick Co. v Illinois, supra, at p 730).

PLAINTIFFS DO NOT FALL WITHIN EXCEPTIONS TO ILLINOIS BRICK

RULE

In the instant case, unless plaintiffs fall within one of the circumscribed exceptions to the Illinois Brick rule, they cannot directly sue the manufacturers of fiberboard cartons to recover the overcharge which Dairylea had passed on to them pursuant to the cost-plus provision of their oral requirements contracts. Nor can plaintiffs recover said amount by suing Dairylea for a violation of the antitrust law merely because Dairylea has passed on the illegal overcharge, unless plaintiffs can show a conspiracy between the manufacturers and Dairy-lea to fix wholsesale prices (see, Reiter v Sonotone Corp., 486 F Supp 115; Albrecht v Herald Co., 390 US 145, reh denied 390 US 1018; Dr. Miles Med. Co. v Park & Sons Co., 220 US 373; see also, State of New York v Dairylea Coop., 570 F Supp 1213, 1215-1216; Dunfee, Privity in Antitrust: Illinois Brick v Illinois, 16 Am Bus LJ 107, 115, n 42). We note that the complaints do not allege such a conspiracy.

The two potential exceptions to the Illinois Brick holding are based on the elimination of the evidentiary complexities and uncertainties which arise in tracing the interaction of market forces in order to prove the amount of the overcharge that had been passed on through the distribution chain.

One exception permits an indirect purchaser to sue for treble damages when there is a "pre-existing, fixed-quantity, cost-plus contract” between the direct purchaser and the indirect purchaser (Mid-West Paper Prods. Co. v Continental Group, 596 F2d 573, 577, supra), because the "effect of the overcharge is essentially determined in advance, without reference to the interaction of supply and demand that complicates the determination in the general case” (Illinois Brick Co. v Illinois, 431 US 720, 736, supra). In a market where demand is perfectly inelastic (unresponsive to changes in price) the indirect purchaser absorbs the entire overcharge; where demand is perfectly elastic (responsive to changes in price) the direct purchaser absorbs it. In all intermediate cases, the overcharge is apportioned between them (see generally, Comment, A Legal and Economic Analysis of the Cost-Plus Contract Exception in Hanover Shoe and Illinois Brick, 47 U Chi L Rev 743, 746; Schaefer, Passing-On Theory in Antitrust Treble Damage Actions: An Economic and Legal Analysis, 16 Wm & Mary L Rev 883).^* Under a cost-plus contract, a product is sold at a specified markup above the seller’s own cost. An illegal overcharge is another of the direct purchaser’s costs, which the indirect purchaser is committed to pay. Where the cost-plus contract is for a fixed amount, the indirect purchaser’s demand for the product is completely inelastic because the indirect purchasers must buy the same quantity at the direct purchaser’s price even though the price may vary with the direct purchaser’s cost (see, Lefrak v Arabian Am. Oil Co., 487 F Supp 808, 819; Schaefer, Passing-On Theory in Antitrust Treble Damage Actions: An Economic and Legal Analysis, 16 Wm & Mary L Rev 883, 892). Moreover, "the [direct] purchaser is insulated from any decrease in its sales as a result of attempting to pass on the overcharge, because its customer [indirect purchaser] is committed to buying a fixed quantity regardless of price” (Illinois Brick Co. v Illinois, supra, at p 736). Since a preexisting fixed quantity, cost-plus contract renders the indirect purchaser’s demand for the product perfectly inelastic, resort to tracing the interaction of market forces is unnecessary to prove the indirect purchaser has absorbed the illegal overcharge in its entirety. However, "where a fixed quantity does not exist, and an indirect purchaser is free to vary the amount of its purchases in response to price changes, the evidentiary problems incident to allocating the amount of the overcharges arise” (Lefrak v Arabian Am. Oil Co., supra, at p 819).

The clear dictate of Illinois Brick (supra) is that the cost-plus contract exception is to be narrowly construed (see, Mid-West Paper Prods. Co. v Continental Group, supra, at p 577, n 9; Lefrak v Arabian Am. Oil Co., supra, at p 818). A primary feature of the cost-plus contract which led the Supreme Court to cite this as a possible exception to Illinois Brick is a "commitment for a fixed quantity, precluding evidentiary complexities due to considerations of decreasing sales” (International Assn. of Machinists & Aerospace Workers v Organization of Petroleum Exporting Countries, 477 F Supp 553, 562, affd 649 F2d 1354, cert denied 454 US 1163). Consequently, an indirect purchaser’s informal week-to-week arrangements to buy varying quantities on a cost-plus basis (see, Mid-West Paper Prods. Co. v Continental Group, supra, at pp 577-578, n 9) and a requirements contract indexed to the distributor’s cost (see, Lefrak v Arabian Am. Oil Co., supra) have been held insufficient to invoke this exception to Illinois Brick because there is no commitment to purchase a fixed quantity. Similarly, in the instant case, the alleged requirements contracts are not encompassed within this exception to Illinois Brick because plaintiffs admit that they were not obligated to buy a fixed quantity. Moreover, according to plaintiffs, the contracts were terminable at will.

To demonstrate that the subject requirements contracts are not the functional equivalent of the cost-plus contract contemplated by this exception to Illinois Brick (supra), it bears repeating that the direct purchaser will be able to shift a larger share of any overcharge imposed on him onto the indirect purchaser in a market where demand is more inelastic and the supply is more elastic. Conversely, the more elastic the demand and the more inelastic the supply, the greater the share of an overcharge the direct purchaser must bear himself (Comment, A Legal and Economic Analysis of the Cost-Plus Contract Exception in Hanover Shoe and Illinois Brick, 47 U Chi L Rev 743, 746). Because Dairy lea’s product, packaged milk, is perishable, the supply is highly inelastic. Since there are some acceptable substitutes for packaged milk products and plaintiffs are not obligated to purchase a fixed amount from Dairylea, the plaintiffs’ (wholesalers’), the retailers’, and the ultimate consumers’ demand for Dairylea’s product is, to some extent, elastic. Consequently, in the usual market, the overcharge for milk cartons will be partially borne by both Dairylea and plaintiffs. How much of the overcharge Dairylea shifted onto plaintiffs and how much it absorbed, as evidenced by a loss in actual or potential sales volume or by adjustments in its charge for pasteurization, depended on the relative elasticities of supply and demand. Accordingly, any attempt to fit the subject requirements contract into the Illinois Brick cost-plus contract exception is misplaced because allocating the amount of the illegal overcharge for milk cartons which Dairylea passed on to plaintiffs cannot be ascertained without reference to complex market interactions of supply and der mand.

A second exception to the Illinois Brick rule is a situation where "market forces have been superseded” because "the direct purchaser is owned or controlled by its customers” (Illinois Brick Co. v Illinois, 431 US 720, 736, n 16, supra). Although Park Lane and Park Dale argue, for the first time on appeal, that Dairylea was their "purchasing agent” for milk cartons, there is nothing in the record to suggest that the relationship between plaintiffs and defendant was anything more than that of vendor and vendee. Each acted independently and made contract and pricing decisions according to its individual concerns. Primary characteristics of an agent-principal relationship are that the agent is placed in a position to affect or alter the legal relations between the principal and third parties in matters within the scope of the agency and that the principal has the right to control the conduct of the agent with respect to matters entrusted to it (see, Smirlock Realty Corp. v Title Guar. Co., 70 AD2d 455, 464). Such is clearly not the situation at bar.

The principle that plaintiffs " 'may not alter a remedy which exists solely by virtue of a statute is * * * too well settled to require citation of authority’ ” (see, Russo & Dubin v Allied Maintenance Corp., 95 Misc 2d 344, 348, quoting from Sun Theatre Corp. v RKO Radio Pictures, 213 F2d 284, 287). Here, plaintiffs seek to recover indirectly what they cannot recover directly. Since plaintiffs were barred in a Federal antitrust action against the manufacturers from recovering treble the amount of the illegal overcharge for milk cartons that had been passed on to them, they now seek, in the guise of an action to recover damages for breach of contract and for money had and received, to recover the same damages in State court from a direct purchaser, who was allowed to recover the overcharge at issue in the Federal action. While such a suit would not expose the defendant manufacturers in the Federal antitrust action to multiple liability, to allow the indirect purchaser to recover from the direct purchaser the amount of the illegal overcharges that had been passed on to it, pursuant to a cost-plus requirements contract that did not fall within an exception to the Illinois Brick rule, would severely impair the private enforcement of the Federal antitrust laws.

EFFECT OF THIS SUIT ON ENFORCEMENT OF FEDERAL ANTITRUST

LAWS

A major policy consideration in concentrating the full recovery for an illegal overcharge in the direct purchaser, rather than allowing every indirect purchaser potentially affected by the overcharge to sue only for the amount it could show was absorbed by it, is to ensure that a group of private Attorneys General will be available to deprive antitrust violators of the fruits of their illegality.

Private antitrust enforcement has two objectives: to compensate victims of antitrust violations (e.g., Brunswick Corp. v Pueblo Bowl-O-Mat, 429 US 477, 485-486) and to deter the commission of such violations (see, Hanover Shoe v United Shoe Mach., 392 US 481, 494, supra; Sun Theatre Corp. v RKO Radio Pictures, 213 F2d 284, 287, supra; Illinois Brick Co. v Illinois, supra). In elevating direct purchasers to a preferred position as private Attorneys General, the United States Supreme Court was aware that the Illinois Brick rule would, on occasion, create a windfall for the direct purchaser, who was able to recoup his economic loss in the marketplace by passing on the overcharge to its customers in the form of increased prices, and would fail to compensate those indirect purchasers who may have been actually injured by antitrust violations. Nevertheless, in the Illinois Brick court’s view, in order to ensure effective enforcement of the antitrust laws, deterrence was the preferred objective.

The most important consideration from the standpoint of deterrence is not who receives the proceeds of any judgment levied against the antitrust violator (see, Illinois Brick Co. v Illinois, supra, at p 760 [Brennan, J.’s dissent]), but that there exists adequate incentives to bring an antitrust suit and prosecute it to judgment (see also, Landes & Posner, Should Indirect Purchasers Have Standing to Sue Under the Antitrust Laws? An Economic Analysis of the Rule of Illinois Brick, 46 U Chi L Rev 602, 608). The Illinois Brick rule was purposely designed to give the direct purchaser the maximum incentive to sue by allowing direct purchasers to recover treble the entire overcharge without subtracting the amount of that overcharge passed on to more remote purchasers.

In establishing standing rules which favored direct purchasers over indirect purchasers, the Illinois Brick court acknowledged that "direct purchasers sometimes may refrain from bringing a treble-damages suit for fear of disrupting relations with their suppliers” (Illinois Brick Co. v Illinois, supra, at p 746). Several other courts and commentators have also recognized that a direct purchaser may not be hurt very much as a result of passing on an overcharge and, thus, may not wish to risk the breach of a long-standing supplier relationship for the chancy potential recovery of windfall damages (see, e.g., In re Western Liquid Asphalt Cases, 487 F2d 191, 198, cert denied sub nom. Standard Oil Co. v Alaska, 415 US 919; Boshes v General Motors Corp., 59 FRD 589, 598 [ND 111 1973]; Dunfee, Privity in Antitrust: Illinois Brick v Illinois, 16 Am Bus LJ 107, 114; Schaefer, Passing-On Theory in Antitrust Treble Damage Actions: An Economic and Legal Analysis, 16 Wm & Mary L Rev 883, 913-914; Wheeler, Antitrust Treble-Damage Actions: Do They Work?, 61 Cal L Rev 1319, 1325; Note, The Effect of Hanover Shoe on the Offensive Use of the Passing-On Doctrine, 46 S Cal L Rev 98, 112; Harrison, Illinois Brick: The Death Knell of Ultimate Consumer Antitrust Suits, 52 St. John’s L Rev 421, 453). In view of the fact the Illinois Brick rule allows only direct purchasers to recover damages for antitrust violations, it is our opinion that enforcement of Federal antitrust laws would be seriously impaired if the direct purchaser’s incentive to bring an antitrust suit is reduced further by the prospect of having to defend his recovery fund against claims from its customers in a State action such as the one at bar. A direct purchaser confronted with the prospect of having to defend its recovery fund against the claims of its customers merely because the illegal overcharge had been passed on to its customers by reason of a cost-plus provision in a requirements contract may readily find the role of private Attorney General too burdensome to warrant the massive expenditure of time and money. The conclusion that such a suit necessarily weakens—and at the extreme eliminates—the incentive of the direct purchaser to act as a private Attorney General is derived from two economic observations. First, in the absence of a preexisting, fixed quantity, cost-plus contract or an indirect purchaser’s ownership or control of the direct purchaser, the problem of apportioning damages among direct and indirect purchasers would be costly, due to the litigation expenses and complex evidentiary problems entailed in proving the amount of the overcharge that had been passed on to the indirect purchaser. Second, even if allocation problems could be solved without seriously depleting the recovery pool, after the recovery is divided among the direct purchaser’s customers, the amount of damages, if any, the direct purchaser is allowed to retain would be relatively small (see, Landes & Posner, Should Indirect Purchasers Have Standing to Sue Under the Antitrust Laws? An Economic Analysis of the Rule of Illinois Brick, 46 U Chi L Rev 602, 608-615). The net effect is to significantly impair the direct purchaser’s incentive to institute or prosecute a Federal antitrust action against his supplier or to file a claim in a pending class action for treble damages.

Furthermore, where a multitiered distribution system exists, as in this case, we note that indirect purchasers (plaintiffs, the milk wholesalers), like the direct purchaser (Dairylea, the pasteurizer), will often be able to pass on much of the cost of an unlawful price increase (illegal overcharge for milk cartons) to their customers (the retailers), who, in turn, will pass it on to the ultimate consumer. Thus, allowing indirect purchasers (plaintiffs, the wholesalers) to recover from the direct purchaser the amount of the overcharge passed on to them may not substantially further the compensatory objective of the Federal antitrust laws (see, Landes & Posner, Should Indirect Purchasers Have Standing to Sue Under the Antitrust Laws? An Economic Analysis óf the Rule of Illinois Brick, 46 U Chi L Rev 602, 608), whereas it may substantially impair the deterrence objective by reducing the recovery fund of the direct purchaser and correspondingly the latter’s incentive to act as a private Attorney General.

In the instant case, plaintiffs, under the Illinois Brick rule, had no legal or equitable interest in the Federal antitrust settlement fund. Plaintiffs concede that Dairylea never specifically agreed to reimburse them for any illegal overcharge in the cost of milk cartons that had been passed along to them in the event Dairylea recovered the overcharges in a Federal antitrust action against the milk carton manufacturers. A contrary allegation is belied by the fact that the parties’ requirements agreements were made years before a class action on behalf of direct purchasers to recover treble damages under the Clayton Act § 4 was commenced against several manufacturers of fiberboard products and years before Dairylea filed a claim as a member of the class. Moreover, when defendant received its share of the settlement fund, plaintiff Jerome Dairy had ceased doing business. Therefore, this is not a situation involving a contract where the parties specifically agreed to distribute the proceeds of a contemplated antitrust judgment. In the latter case, the direct purchaser, in entering into such an agreement, would arguably have received some form of consideration to furnish it with the requisite incentive to file an antitrust claim, even if it took the form of an increase in the direct purchaser’s good will. Here, based merely on the nature of a cost-plus pricing provision, plaintiffs plead an implied promise by Dairylea to pass along reductions in the cost of milk cartons, including funds it recovered in a Federal antitrust action for illegal overcharges that had been passed on to plaintiffs pursuant to the same cost-plus pricing provision. The artful pleading is an attempt to circumvent the Illinois Brick rule.

To reiterate, allowing plaintiffs to bring an action either for breach of contract or for money had and received against Dairylea for the purpose of recovering the amount of an illegal overcharge Dairylea passed on to them because their respective requirements contracts contained a cost-plus pricing provision, when said remedy is foreclosed by direct suit against the antitrust violator, would undermine effective enforcement of the Federal antitrust laws by substantially impairing the direct purchaser’s incentive to act as private Attorney General. Accordingly, to the extent the cost-plus pricing provision in the subject requirements contracts could be construed as an implied promise by Dairylea to remit to plaintiffs any portion of its antitrust settlement fund, as a purported reduction in the cost of milk cartons, it is violative of Federal antitrust policy. Consequently, Special Term correctly granted defendant’s motion for summary judgment, dismissing plaintiff Tip Top’s complaint, insofar as it seeks to recover the proceeds Dairylea received in settlement of the antitrust litigation, and dismissing the other plaintiffs’ complaints in their entirety.

Two other issues must be briefly addressed. First, plaintiff Tip Top’s complaint pleads an additional cause of action not alleged in the other plaintiffs’ complaints. Tip Top alleges that from 1978 to 1980, Dairylea received discounts from the manufacturers of fiberboard cartons based on the volume of its purchases. Tip Top asserts that Dairylea breached the cost-plus provision of their agreement by failing to pass along the volume discounts received by Dairylea for the milk cartons Dairylea sold to Tip Top. With respect to this claim, Special Term correctly denied summary judgment because a factual issue exists as to the meaning of the cost-plus provision, i.e., whether defendant was to sell milk cartons to Tip Top at its current or its final cost. Second, defendant’s motion to amend its answers to assert the Statute of Frauds defense was properly denied for reasons stated in the opinion of our learned brother Justice Lazer. As noted by Justice Lazer, Uniform Commercial Code § 2-201 (1) is inapplicable because the milk cartons had already been delivered, accepted and paid for pursuant to the parties’ oral agreements and General Obligations Law § 5-701 (a) (1) is inapplicable because the subject agreements were capable of performance within one year.

Accordingly, the orders appealed from should be affirmed.

* A similar analysis applies when supply is either perfectly elastic or perfectly inelastic, except that perfect inelasticity results in the direct purchaser absorbing the entire overcharge, while perfect elasticity places the overcharge on the indirect purchaser (see, Schaefer, Passing-On Theory in Antitrust Treble Damage Actions: An Economic and Legal Analysis, 16 Wm & Mary L Rev 883, 887-897).